What benefits can be obtained from prepaid debit cards?

People who avoid having a credit card prefer to use prepaid debit card instead. In the U.S., this type of card is often used by those in the low income group.

With the high costs involved in using a credit card, it is understandable that people do not earn enough those without bank accounts who use prepaid debit card. Data research firm Aite Group found that about 70 percent of people who use prepaid cards are those earning less than $ 45,000.

This card has its advantages. On the one hand, it is easy to use because people have quick access to your money and can use it to shop online or through electronic kiosks. Second, a user does not need to provide more personal information. Additionally, the owner of this card does not have to visit any bank branch. Those who are not creditworthy also benefit from this. The other advantage is that users learn how to budget, since they need only spend the amount loaded on the card.

This card is also useful for those receiving disability benefits, unemployment, social security, veterans assistance and other benefits from the government on a regular basis. As the U.S. government is about to eliminate the use of checks in 2013, people who receive benefits have two options. You can open a bank account or prepaid card. The second option is considered more suitable particularly for the elderly.

Prepaid debit cards are often preferred by people who do not have or want to avoid bank accounts. Today, reports say that more than 10 million households in the U.S. use this type of card. It is also expected that the amount charged on these cards will increase to $ 288 million in 2014 from just $ 41 billion in 2008.

Unlike using a credit card that consists of various fees for ATM use, cash advances to finance charges and interest, prepayment fees are very minimal. The activation fee can only be about $ 10 monthly fee can only be $ 9, while the fee for using an ATM to withdraw money is only about $ 2.50.

Unfortunately, the latest report says that rates of stroke of these cards are bound to go up next month. This is through the implementation of a new rule to require companies to lower prices to retailers for free. Therefore, card issuers will be forced to recoup their loss of income and the only way we will achieve that by raising rates for people who use prepaid debit cards.

Rising rates, however, is expected to take place immediately. Authorities say there's a lot of work to make changes including the codification of debit cards to distinguish from other types of card. Until then, users can decide whether to continue with what they have or open a bank account, regardless of the charges involved.